Estate Planning for Young Families

Too many younger families postpone estate planning. Thinking about what is going to happen when you pass away may be unpleasant, however, having a proper estate plan is vital to prepare for the unforeseen. In the event of an ailment or accident, you should have measures in place to guarantee your spouse and children are provided for without you.

Thankfully, estate planning sounds a lot more challenging than it really is. The process can be a bit more complicated for families with wealthy estates and complex holdings, but for a lot people it’s somewhat simple. There are five key elements to an estate plan for younger families:

1. A durable power of attorney – A DPOA is a document that appoints someone as your legal agent, giving them authority to make decisions on your behalf, should you be unable to.
2. Living will – A living will is a legal document that dictates how you prefer to receive medical treatment when you no longer can make decisions for yourself.
3. A letter of intent – A LOI is documentation written in a business letter layout that affirms your intent to do a particular thing. It’s typically, but not every time, not-binding, and it states a precursory commitment of one party to conduct business with another party.
4. Your last will and testament – This is a legal document that conveys an individual’s final wishes related to their assets. It states specific instructions concerning what to do with their belongings.
5. A trust – Commonly, a trust is an affair where one person holds title to property, dependent on a duty to hold or use the property for another’s benefit. Trusts are formed under state law.

Safeguarding Minor Children

For a lot of parents, the main objective of estate planning is to guarantee that their children are cared for in case anything happens to them. Whereas we would all like to think that we are going to be able to leave our estate to our adult children following a long and worthwhile life, sometimes life can throw us a curveball in our plans. It’s understandable that it’s never enjoyable to think about leaving your minor children behind because of an unanticipated passing but anticipating that the worst might happen is vital for devising an estate plan when you have minor children.

Each family situation and estate plans are unique, and when creating yours we request you to consider the two below aspects to guarantee your minor children are looked after and cared for.

1. Guardianship

Choosing a guardian for your children is probably one of the most impacting decisions in your estate planning process, you must make. When you and your spouse are unable to care for your children, a legal guardian is going to take on this responsibility. They are going to be able to make all the children legal, medical, educational, and financial decisions until they are no longer minors. They also take the responsibility of providing basic care such as homing, food, schooling, and health care for your children.

2. Trusts

Minor’s trusts or “trusts for minors”, are a kind of trust used for minors to retain and allocate property or assets to minor children. They usually provide details that the funds or property assets are going to be retained in trust until the child(ren) are no longer minors.

A minor trust can help guarantee the financial protection of a young family member following your passing away. Because we do not know how much time we’re going to have left with our loved ones, it’s in our best interest to plan for the allocation of our assets sooner than later. Using a minor trust, you may leave your belongings and other assets to a young family member under eighteen years of age. The trust is going to help guarantee your assets are properly overseen until the beneficiary is eighteen or older.

Comprehensive Plan for Young Families

Family financial planning can assist you in creating a comprehensive strategy for the management of your money as you move through various stages in life. It begins with the basics – establishing a budget and saving – however, a family financial plan can also comprise of things such as investing for when you retire and earmarking funding for college. Devising a long term plan for your family’s finances is one thing you can accomplish on your own but it’s also something you may need a financial consultant’s assistance with.

What Is Family Financial Planning?

Generally, financial planning means planning for specific objectives you want to achieve with your money and planning the steps you should  to take to accomplish them. Financial planners help people devise a financial plan, then implement it.

Family financial planning is all the aforementioned, with a concentration on specific situations that families might need to plan for. This kind of financial planning accounts for the different ways marriage or having children can impact the way of handling your money.

How to Create a Family Financial Plan

When you’re thinking of creating a financial plan for your family, there are some key aspects to include. As you begin with family financial planning, below are some of the most important areas to go over.

• Budgeting and Spending
• Debt Repayment
• Financial Goals
• Retirement Planning
• College Planning
• Insurance Planning
• Estate Planning

Life Insurance in Estate Planning

Life insurance could play a significant role in estate planning, from assisting your beneficiaries in covering your final expenses and estate taxes to leaving behind assets for your children. You are going to need to factor in your life insurance to your estate planning differently subject to if you get a term or permanent life insurance policy.

Types of life insurance for estate planning

Below are two types of life insurance that are usually used in estate planning.

Term life insurance as estate planning

Because term life insurance pays out death benefits should you pass away throughout the “term” that the policy is active (usually ten to thirty years), you might select this alternative for estate planning only when you would like a policy for supporting your estate until you reach a specific age. You might select this alternative should you anticipate that pay outs for your final expenses, estate taxes, and any inheritances you wish to bequeath to your beneficiaries could come from a different source (such as savings or holdings) following a certain point in your life.

Permanent life insurance as estate planning

A permanent life insurance policy stays in effect throughout your entire life, regardless of when you reach your demise, and they benefit from a cash value that gain over time. You might decide on policies such as permanent life insurance  when you wish to guarantee any estate tax, final expenses, and the birthright you plan on leaving behind gets covered by your life insurance death benefit regardless of when you reach your demise.

When should you begin using life insurance in estate planning?

After you’ve acquired some assets, bought a home, or started a family, it’s time to think about life insurance in estate planning. It’s typically less costly to get life insurance when you’re young, as your health risks are typically lower. As you get older, life insurance policies are going to become more costly. So should you be planning on using your life insurance for supporting your estate, it’s a good idea to start planning sooner than later.

Arizona Family Law

Naming guardians in your will can be part of your estate plan. You may think you’re too young or don’t have enough money to justify the expense, but if you have children, you have priceless assets. There are many considerations when naming guardians for your kids. However, the process doesn’t have to be expensive or complicated.

There’s nothing better than the peace of mind you will have knowing you’ve protected your family at a time when they need it most. Let us help. Schedule a consultation or contact Ogborne Law, PLC of Arizona today.